A $10,000 bond pays semi-annual coupons at j2 10% every January 5 and July 5. It is purchased on February 5, 2021to yield j2 = 11%. The full (or dirty) price of the bond on February 5, 2021 is $9578.38. Using the method that is mostcommonly used in practice, what would be the price of the bond on the coupon date, January 5, 2021?A. $9498.67O B. $9493.29C. $9490.95OD. $9488.99Reset Selection

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what would be the price of the bond on the coupon date, January 5, 2021?

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ISBN:9781337669214

Author:GARMAN

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Chapter14: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6DTM

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

A $10,000 bond pays semi-annual coupons at j2 10% every January 5 and July 5. It is purchased on February 5, 2021
to yield j2 = 11%. The full (or dirty) price of the bond on February 5, 2021 is $9578.38. Using the method that is most
commonly used in practice, what would be the price of the bond on the coupon date, January 5, 2021?
A. $9498.67
O B. $9493.29
C. $9490.95
OD. $9488.99
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